IKAR in Mass Media

HIGHER GRAIN PRICES NOT ONLY REASON FOR RISE IN BREAD PRICES IN RUSSIA – EXPERT

20 июля 2007 года

Higher grain prices are not the only factor behind rising bread prices in Russia, Institute for Agricultural Market Studies (IKAR) general director Dmitry Rylko said.

“Bread prices were even growing in Russia when the cost of grain and flour were falling,” he told Interfax.

There was a long period from October 2004 to November 2005 when grain and flour prices fell significantly, but the retail cost of bread continued to rise, he said. The actual disparity in the cost of grain and retail bread prices has increased by 50%-100% over the last few years, he said.

Noting that the share of grain in the cost of bread is less than 20%, Rylko said the rise in bread prices is also being significantly influenced by growth in other production costs, such as salaries, spending on energy and leasing facilities. “In particular, there has been a mass switch in the industry over the last few years to producing products in individual packages, which is also reflected in the price,” he said. Mark-ups at retail chains have also increased, he said.

Bread is divided into two components – mass production and small packaging, he said. “The cost of small packaging is constantly rising, while the price lists for mass bread change sporadically under such favorable moments for trade when grain and flour prices both grow. Since mass bread is a social commodity, it’s difficult for the price lists to change every day, but bread producers and retailers use the hike in grain prices to ‘package’ all their costs and profit in the price at that moment,” he said.

The current situation on the Russian grain market is a direct result of what is happening on the global grain market, Rylko said. “We can’t shield ourselves from the world market – administrative measures don’t help,” he said.

The possibility of an administrative impact on prices is being discussed in a number of regions. In particular, Nikolai Fyodorov, president of the Republic of Chuvashia, has instructed the Cabinet to come up with a set of measures to protect the republic from the rise in grain prices.

Bread prices grew by an average of 50 kopecks in Cheboksary at the end of last week. Moreover, a number of crops in the region were damaged by hail.

Chuvashia had planned to increase its grain harvest 7% to 457,000 tonnes in 2007, but now officials from the republic’s agriculture ministry are revising these figures. Harvest work will begin in the region on July 25.

Source: Interfax | #grain | Comments: 0 Views: 62

There are no comments yet. Be the first!

Only authorized users can comment.